How to make your business more diverse

Many strong businesses have diverse income streams, and the advantages of diversification have been well and truly reinforced by the recent pandemic shutdowns. Now as many business owners are beginning to emerge from the COVID-19 blockade, questions about futureproofing are addressed. How can you ensure your business to be successful once the borders are closed? Does your previous offering fit into the new normal‘? Perhaps, most importantly is how do you get prepared should we have to go back into lockdown once more? The answer may lie in diversification of business.

Why diversify?

Experts have observed unfolding during the first half of the year known as 2020.

Diversification in your business is a method to reduce your risk when working in an uncertain economy. It is a way to are prepared should anything go wrong.

Diversification safeguards you not only from unanticipated shocks like COVID-19 however, it also protects you from common issues like when competitors come along.

There are plenty of diversification options on the market, however there’s plenty to think about before you decide to dive the deep end.

We’re not going to suggest that you embark on a journey to do anything crazy, like spending large sums of money in something that you’re not comfortable with. However, if they think about their current business environment and their expertise, there are always peripherals around that they’re not necessarily in which could offer enormous opportunities for them because they’re not yet their normal space.

Getting started

Before starting your diversification journey it is essential to complete your research.

Know where you’re going and who your competitors are particularly if you’re moving into a market that isn’t yet established.

If, for instance, you’re making machinery that is used for food production, the best place to go to might be for consumables. In a prosperous economic environment, the machinery will be selling however in a not so good economy, like the present, people are still buying the consumables.

When you’re lacking the knowledge of the market you’re trying to get into, it’s like driving down the highway while wearing a blindfold on.

It’s recommended that you stick with what you know particularly if it’s your first time to dip your toes into the pool of diversification.

If you’re planning to diversify into a market that isn’t within your business expertise or skills, then you need to consider hiring someone who does have that know-how. There are many aspects, but not great at others. Therefore, you should hire employees with the skills and knowledge you need. If you’re not equipped with that then you’re adding to the risk.

There are risks to take into consideration

Diversifying your business involves diversifying your focus.

Your goal is to please your customers and increase your base of clients. Therefore, the problem you face when you expand your business is that you’re putting in manpower on your new offering. If you’re not careful, you could end up spending all of your staff on the new possibilities and leaving the existing ones in place.

It’s crucial to make sure your business is satisfying the customers that you already have and growing those who are your customers.

Make sure you don’t chew more than you can chew.

Be aware of taking the time to accomplish this. I’ve seen countless businesses over the years who go broken because of doing something wrong… and that includes the biggest, most intelligent ones.

This is the problem of being a small-scale business owner, he says. You face many of the same issues that big companies face, but with less resources to react to and correct your mistakes, so you must be cautious.

Any business change or business venture is a risk, but you can get some really great risks and make very smart decisions, earn you a significant amount of money and be successful… If you’re smart about it.

Finding opportunities

Diversification was a must for some business such as a gelato producer that operates mostly as a wholesaler for restaurants and sellers of gelato. However, by February of this year, they began to see problems ahead.

"I didn’t really think it was going to affect us that much, after seeing the news coming from abroad"

However, they noticed that one of their main customers, whose business relied heavily on overseas tourists had stopped taking orders.

At this point, they were one week into lockdown , and they realized they needed to have a plan of diversification for them to be able to get through.

"I started to look around for other companies we could acquire that could complement what we are doing"

"I discovered a different business that was actually providing to supermarkets. I began looking into buying part of the company during lockdown, and eventually bought 50% of the business."

This move didn’t just bring in a new client base. It also gave them to take on new business.

"Their manufacturing was done by an unrelated contractor. So, by us buying it, we’ve actually bought the manufacturing contract"

"If we are forced to go through another lockdown, or something goes wrong, then we’ve still got the supermarket aspect of the business to continue."

It was the perfect example of a business taking an opportunity to grow on a strength the company already had.

It can feel like a do-or-die scenario. However, over-reacting to situations could cause harm in the long run.

"Part of the problem is that, when people get caught in trouble, they take the wrong choices. Particularly now, with the effects of COVID-19" he states. "So my advice is to get some non-emotional advice from someone who isn’t connected to your company.

"If you’re struggling emotionally or financially, and you’re feeling stressed and piled up, then find some assistance. Get on the phone and speak to someone. There are lots of clever individuals who can assist you, so don’t attempt to do everything by yourself."